On December 31, Bregler Company’s Prepaid Insurance account had a balance before adjustment of $6,000. The insurance was purchased on July 1 of the same year for one year of insurance coverage, with coverage beginning on that date. The adjusting entry needed on December 31 is:

Clayton makes a $25,000, 90-day, 7% cash loan to Citrus Co. The amount of interest that Clayton will collect on the loan is: (Use 360 days a year.)

In its first year of operations, Wilco Company reports the following: Earned revenues of $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash paid toward them); Prepaid $8,000 cash for costs that will not be expensed until next year. Net income under the accrual basis of accounting is:

Flowers, Inc. purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 5 years with a $4,000 salvage value. Depreciation expense in year 2 is:

Horizontal analysis is used to reveal patterns in data covering two or more successive periods.

On April 30, Holly’s Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

On July 1, Silver Spurs Hotel borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each June 30 of $37,258. What amount of interest expense will be included in the first annual payment?

Hang Ten Surf Co, had annual revenues of $185,000, expenses of $103,700, and paid dividends of $18,000 during the current year. The retained earnings account before closing had a balance of $297,000. The Net Income for the year is:

Rayford Inc.  purchases a machine at the beginning of the year at a cost of $60,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 4 years with a $5,000 salvage value. Depreciation expense in year 4 is:

The expense recognition principle, also called the matching principle: